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After a banner year of 2021 for individual object sales through nonfungible tokens (NFTs), 2022 is poised to be the year of MetaFi. A recap of Beeple, Christie’s, Visa and endless aping-in celebrities hardly feels necessary, except to point out that we seem to be standing on (or perhaps have already crossed over) a fundamental precipice. While the rocket-propelled ascent of NFT prices will not continue forever, numerous voices have predicted that a mature tech stack for discovering, vetting, valuing, trading and protecting collections of digital assets will soon emerge, without a crash.But these optimistic takes may even be selling the area short. Namely, the premise of the “NFT-Fi” sector is to create value through liquidity, but it has remained an unstated assumption that this liquidity would be confined fundamentally to the world of crypto itself. While it is still early days, those boundaries may be eroding, and we may all need to open our meta-apertures even wider. In this regard, Switzerland stands out among numerous countries that have only started to pilot experiments with central bank-backed digital currencies (CBDCs). The confederacy of cantons, home to both Davos and Art Basel, is known for its rich history of innovation in both creative and financial assets, and its moves are worth tracking closely. At the end of last year, the Six Digital Exchange (SDX), the digital entity of the SIX Group, the financial services company that operates the infrastructure of the Swiss national stock exchange, considered opening up their exchange to NFTs. This possible move dovetails with the advancement of a major experiment with CBDC. Taken together, these early steps will lend credence and endorsement to both digital currencies and the NFT secondary market, integrating many kinds of digital holdings more closely into the fabric of Swiss finance, itself.To say that the international regulatory perimeter of tokenized assets is inchoate or poorly understood would be a wild understatement. Legal ambiguity, bad actors, technology failures, public panics and more can undermine the smooth functioning of digital marketplaces, with the potential for spillover impact on the conventional markets magnified by their growing imbrication. Recent hand-wringing over the identity exposure of the Bored Apes creators as well as revelations from the multibillion-dollar Bitfinex hack attests to the already enormous stakes of calibrating the needs for personal privacy and public disclosure. As Web3 enters territory that blurs the line between not only physical and digital goods but also between private and public exchanges, it is imperative to consider how legal frameworks (and the path of least resistance through them) have shaped the analog version of this world that the crypto-forward future hopes to supplant. Related: Will regulation adapt to crypto, or crypto to regulation? Experts answerFully grappling with these questions is far beyond the scope of a short article. But for the present discussion, we would like to briefly highlight the question of digital privacy as a nexus between art, law and economics. Based on tactics pioneered in Switzerland coincident with the rise of global finance in the 19th century, fine art has become a central means of moving assets through the shadows and edges of international law. This backdrop, poorly understood by those who are outside of the art industry, constitutes an enormously important context for the coming collision of international privacy laws, global digital art and the promise of a publicly verifiable blockchain. The coming collision of public scrutiny and digital privacyRegulators have been busy filling in the gaping holes left exposed by the vertiginous adoption, or in the case of Switzerland, legitimization of tokenized assets. But of course, any ambiguity in enforcement will ultimately undermine the smooth functioning of tokenized marketplaces, now with potential spillover impact on the world’s conventional markets. Any updated government policy aimed at striking a balance between social interests and individual privacy could have rippling effects on investors, auction houses and art collectors. The General Data Protection Regulation (GDPR), one of the world’s toughest pieces of legislation on data privacy, has fast become the world’s blueprint for leveraging fines as a way to amplify the pain of breaches. Yet, records show that privacy breaches remain ubiquitous on a global scale. Penalties for violations of the European Union’s privacy law have soared nearly sevenfold in the past year. Data protection authorities have meted out $1.25 billion in fines over breaches of GDPR since early 2021, which was up from about $180 million a year earlier. Perhaps this coincides with the views of legal scholars who argued that monetary sanctions do not necessarily lead to better compliance and ultimately better data protection for individuals.Related: Concerns around data privacy are rising, and blockchain is the solutionWhy does it matter in the world of crypto? For one, until global legal authorities manage to catch up with the fast-moving cryptocurrency freight train (which they probably cannot), collisions with existing regulatory regimes are bound to occur. Lest we forget, cryptocurrency relies on a public ledger or a blockchain, which is used to maintain participants’ identities in an anonymous form, cryptocurrency balances, and a record book of all transactions executed. One can conveniently draw parallels between a blockchain and the use of Swiss numbered accounts, which was once used to maintain confidentiality thereby sidestepping any Internal Revenue Service’s oversight. These accounts were relics of the 80s before the rollout of the deferred prosecution agreement to forbid pervasive tax evasion. What makes cryptocurrency unique — the ability to maintain a high level of anonymity and privacy — runs contrary to other tenets of data privacy law. A convenient example is the “right to forget” enshrined under the GDPR, but the immutable nature of the blockchain means it is nearly impossible for any given individual to exercise such a right. The law gives individuals the right to rectify inaccuracies in their personal data, and blockchain technology might make this right functionally impossible to exercise. In the event that NFTs contain any traces of personal information — such as provenance for an NFT work — these bits of data may be caught by the long arm of extraterritorial law. And conversely, a well-established right to privacy could serve as a shield behind which all sorts of devious actors can operate. Such has been the historical norm of the art world for well over a century.In the shadows of the freeportIn the pre-COVID, pre-BAYC moment, the biggest open secret in the art world had to do with the storage of art in “freeports,” specially demarcated economic zones exempt from most, if not all, taxation. While the exact scope of the practice is of course impossible to determine, serious investigative journalists have estimated that more than one million global works sit in such jurisdictional limbo. Predictably, one of the world’s largest and most valuable artwork storage freeport facilities sits in Geneva — a New York Times article reported that this single tax shelter housed more than a thousand Picasso works, as well additional objects produced by Old Masters including Da Vinci and Renoir. Important paintings by these eminent figures might fetch tens or hundreds of millions at auction.Related: Minting, distributing and selling NFTs must involve copyright lawThe practice of storing art objects and other valuable commodities within trading ports to skirt the edges of tax liabilities has been developed and refined by Swiss innovators, entrepreneurs and con artists for well over a century. The basic idea extrapolates from the well-established concept of a non-territorial treaty port for trans-shipment. While the Geneva freeport has been used to store grain, coffee and other goods bound to and from destination throughout Europe since its founding in 1888, it has increasingly found itself as a tax-advantaged repository at the crux of the global art trade. Old Masterworks procured at the original Art Basel, for decades the unchallenged clearinghouse for fine object d’art, could be left almost on site to appreciate in value and be resold without any tax on gains. More villainous possibilities, such as the trade-in of looted artifacts or exchange of dirty money for clear art, linger in the murky darkness. Such practices have been fostered by a deep-rooted cultural and legal framework of financial non-disclosure.The time has changedThe new, Web3-powered chapter is now being written before our eyes in real time. While the United States’ biggest freeport recently closed after just two years in operation — COVID-19 pandemic and other factors seem to have withered the interest in the deluxe storage of objects — the Singapore-based Le Freeport, a new offering from the team behind the Geneva facility, held a major NFT exhibition to close out 2021. The exhibition featured nearly three dozen works by artists ranging from Beeple to Andy Warhol, and strikingly, only was for sale. [embedded content]Such mostly non-sale exhibitions have been used to cultivate prestige around a work, a prestige that can later be used to justify inflated appraisals for regulatory arbitrage. And just this week,the U.S. Treasury flagged NFT sales as a new front in the global war on money laundering — as anonymous transactions may permit the trade of dirty money for clean art, which may then be resold, or soon, listed on a public stock exchange. One struggles to imagine a more perfect mechanism for obfuscating such transactions than the GDPR, nor a more respectable venue for disposing of such newly “cleaned” assets on a public stock exchange.Importantly, financial regulatory frameworks create paths of least resistance–loopholes designed into the system, thin enforcement mechanisms, and opportunities for regulatory arbitrage have all funneled capital and its associated cultural products into one direction or another. As we have argued elsewhere, the advent of the serial-style work of Pop Artists such as Jasper Johns and Andy Warhol was equal parts aesthetic innovation and tax evasion. The recognized achievements of Land Art, media art and 1980s painting were all made possible by matching ingenuity on the right and left sides of the balance sheet.What will come of the collision of newly empowered privacy law, non-sovereign wealth and newly unshackled crypto-creativity will perhaps only be known in time. But as the world’s legacy and decentralized systems for art and money grow more interconnected, the stakes of success and failure continue to grow more vertiginous by the day.This article was co-authored by Michael Maizels and Adam Au.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.This article is for general information purposes and is not intended to be and should not be taken as legal advice.Michael Maizels, an art historian by training, is a technology researcher with Pilot44, a boutique innovation consulting firm in San Francisco, and is also affiliated with the metaLAB, a think tank and creative design studio at Harvard University. His new book on financial innovation in modern art history will be out from the University of Michigan in September.Adam Au is an attorney and international data privacy expert based in Hong Kong. He is currently general counsel & company secretary of a public health company, and is a regular contributor to the South China Morning Post on topics at the intersection of technology and international law. He holds an economics degree from Brown, a law degree from Oxford and an MBA from MIT Sloan.

Last year, El Salvador dominated headlines as the first country to adopt Bitcoin as legal tender. The move is controversial both in and outside of the country, heralded for its potential to bring financial services to large portions of El Salvador’s unbanked population and criticized for its top-down implementation. This has created a sense of uncertainty and made some Salvadorans feel they lacked a choice, despite locations like El Zonte already accepting Bitcoin (BTC) as payment through organic developments that predate the law.These arguments, while for and against the law, don’t actually exist in contradiction to one another. While the decision may have been made by the government, it is bringing financial services to new portions of the population. Not all governments, however, are interested in declaring Bitcoin a legal tender, leaving us to consider a new question: How can we encourage crypto adoption in emerging markets like El Salvador without involving governments?Related: What is really behind El Salvador’s ‘Bitcoin Law’? Experts answerBanking the unbanked in Latin AmericaIn August of 2021, the World Bank reported that nearly half of the Latin American and Caribbean (LAC) population were unbanked, meaning that they had no access to a bank account or other financial services. These unbanked individuals cited the cost of maintaining an account, distance from financial institutions, lack of necessary documentation and lack of trust as among the most common reasons for remaining unbanked. Being unbanked poses major challenges, making it difficult for individuals to safely receive payments, save money, transfer funds outside of their communities or access credit and their credit scores. In short, being unbanked can make it nearly impossible for individuals to perform the daily financial transactions that many of us take for granted. Cryptocurrencies are changing that by helping individuals access online financial services like savings applications, lending platforms and even micro-insurance solutions from their mobile devices with far fewer hurdles and for lower fees than traditional financial institutions demand. It’s these three characteristics of cryptocurrencies — accessibility, affordability and anonymity — that make Bitcoin an appealing option for banking the unbanked in countries like El Salvador. Understanding government interventionIt’s important, however, to make the distinction between impact and implementation. While mass adoption of cryptocurrencies like Bitcoin can have a profoundly positive impact on unbanked populations, offering a new alternative for accessing vital financial services will bring forth more than a few ways to encourage that adoption.El Salvador chose government intervention, implementing Bitcoin as a legal tender as part of a larger strategy to move El Salvador out of poverty. In fact, the government itself even chose to invest its reserves in Bitcoin, taking on the risk of volatility in favor of the potential earnings and keeping its promise to support building infrastructures like schools and public facilities across the country.Related: ​​El Salvador: How it started vs. how it went with the Bitcoin Law in 2021Reenvisioning mainstream adoptionHowever, government intervention isn’t the only option. As many governments across Latin America express their disinterest in accepting Bitcoin as legal tender, we’re beginning to envision alternative options for encouraging mainstream adoption from a more grassroots perspective. In my mind, there are five key factors that we must consider: mobile access, education, financial barriers, institutional adoption and Bitcoin alternatives.Promoting mobile accessibility For the mass adoption of cryptocurrencies to take root, financial technology companies involved in the crypto space must offer mobile-friendly solutions to users. In Latin America and the Caribbean, less than 50% of the population has fixed broadband connectivity, and only 9.9% has high-quality fiber connectivity at home, while 87% of the population lives within the range of a 4G signal. That’s a 37% increase in the number of individuals able to access financial services when they’re made available on mobile devices. If fintechs can create financial solutions for mobile phones, they can make it more convenient and intuitive for new users to engage with this novel technology.Offering educational servicesWhile mobile-friendly crypto offerings are already becoming the norm across the crypto space, education is another key consideration. Without a proper understanding of what cryptocurrency is and how it works, individuals cannot be expected to trust the technology or use it safely. Lack of trust was among the major reasons individuals cited for being unbanked.Related: Mass adoption of blockchain tech is possible, and education is the keyFintechs can overcome that barrier and foster trust in cryptocurrencies by developing transparent educational programs designed to show users what cryptocurrencies are and how they can benefit from the technology. Programs such as Rabbithole are even taking that education a step further by incentivizing learning through learn-to-earn programs that reward users for learning to participate in decentralized applications (DApps). When that education is successful, it can move beyond building trust and inspire communities to build on top of preexisting technologies, adapting it to meet their needs and bringing even more users into the space.Breaking financial barriersOf course, to begin transacting at all — be it through traditional or technical financial services — users must have basic funds. Universal basic income (UBI) initiatives can be especially effective in encouraging digital currency adoption by providing essential resources (i.e. income). ImpactMarket is currently leading the way for UBI in the blockchain space, allowing for the creation and distribution of unconditional basic income between communities and their beneficiaries through its decentralized poverty alleviation protocol. When funds are sent as digital assets through mobile-friendly education-oriented platforms, they encourage users to adopt the technology without forcing use upon individuals.Related: How cryptocurrency can help in paying universal basic incomeEncouraging institutional adoptionThe final piece of this puzzle is institutional adoption. UBI, education and mobile access will only get new users, especially otherwise unbanked individuals, so far if they cannot see opportunities to transact using digital currencies in everyday life. Groups like CARE and the Grameen Foundation are already incorporating blockchain technology into their transactions by using cryptocurrencies to provide aid in Ecuador and the Philippines, respectively. When institutions use cryptocurrencies to effect positive change, they inspire new trust in the technology while making funds available to vulnerable populations.Branching out from BitcoinBitcoin’s popularity and El Salvador’s move to adopt the cryptocurrency as legal tender should be viewed as an endorsement for cryptocurrency more broadly. Bitcoin isn’t the only cryptocurrency capable of bringing financial services to unbanked individuals across the world. Other cryptocurrencies offer lower gas fees and smaller environmental impacts. While stablecoins serve as a safe alternative to Bitcoin’s price volatility. It is worth considering how a variety of cryptocurrencies and stablecoins with varied benefits like fast transaction speeds, low gas fees and price stability, could be combined to offer individuals more accessible and affordable financial services.Think localEl Salvador’s decision to implement Bitcoin as a legal tender may have emerged in recognition of cryptocurrencies’ potential to benefit huge portions of the country’s population, but we cannot expect all countries to follow in its footsteps. Fintech companies entering emerging markets in Latin America and beyond must consider alternative grassroots strategies for encouraging crypto adoption — mobile accessibility, education, access to funding, institutional adoption and Bitcoin alternatives will be key to encouraging mass adoption of cryptocurrencies in emerging markets without involving governments.To make these changes, it’s important to think local rather than global. How can we tailor programs to meet these five needs to smaller communities across the globe, helping individuals access digital currencies and financial technologies that meet their distinct and diverse needs?This article was co-authored by Xochitl Cazador and Angélica Valle.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.Xochitl Cazador leads platform and builder growth at Celo Foundation. She has extensive experience shaping strategy into execution to drive growth and scale operations. Prior to Celo Foundation, Xochitl spent 15 years driving growth at Cisco, where she managed a $1 billion investment portfolio and led the expansion into 26 emerging markets resulting in 30% year-over-year growth. Xochitl holds a master’s degree from Stanford Graduate School of Business.Angélica Valle serves as ecosystem lead for Mexico at Celo Foundation, bringing with her more than four years of experience in Mexico’s blockchain ecosystem. Before joining Celo, Angélica founded the digital transformation and blockchain consulting agency Oruka where she served as an adviser providing tailored solutions to governments and companies involved in the blockchain industry. In addition to her work with Mexico’s blockchain ecosystem, Angélica has more than 10 years of experience in areas of public policy, social entrepreneurship and innovation.